CSU Students and Parents May Qualify for New Tax Credit

January 11, 2010
By Erik Fallis

For tax years 2009 and 2010, there is a new post-secondary education credit called the American Opportunity Tax Credit (AOC). The AOC was created by the American Recovery and Reinvestment Act (stimulus plan) of 2009 and is a modified version of the Hope Credit, which has existed since 1997.

The AOC may have several benefits for CSU students or their parents (in the case of dependents). The maximum amount of the AOC is $2,500 per student, an increase from previous years. The credit can be claimed for the first four years of post-secondary education, doubling the previous duration of the Hope credit. The AOC is also now a refundable credit for most taxpayers, with higher income qualification limits and an expanded list of qualified expenses.

The California State University continues to be a leader in affordability. On average, factoring in financial aid, the state university fee is offset dollar-for-dollar with grants for financially needy families with incomes less than $75,000. For those families with $75,000 to $180,000 in annual income, available grants and tax credits may exceed the latest fee increase.